The transformation of the telecom network is taking place at a faster pace than expected, according to Infonetics. Principal analyst Kevin Mitchell’s latest quarter report on sales of Service Provider Next Gen Voice Equipment shows record growth for the second quarter of 2005.

Sales of next-generation voice gear rose 18% over the previous quarter and 55% year-over-year, Mitchell said. “Investments are marching ahead, and typically outpacing my forecasts,” he said.

The equipment sales figures don’t quite jive with recent accounts claiming that VoIP isn’t having the network impact some had predicted.

“There is still a chasm to be crossed for getting from equipment sales to services, especially in the business sector,” Mitchell said. “Carriers have to define and market the services they can make money on. On residential side, subscriber figures are growing quite nicely. Cable companies are having amazing growth and that is VoIP.” Every segment of the next-gen equipment market is growing, although the Class 4 softswitch and media servers didn’t experience the second quarter bounce of the rest of the market.

Infonetics expects North American residential/SOHO VoIP subscribers to jump from 1.1 million in 2004 to 24.3 million in 2008, adding six million new subs per year from 2006 to 2008.

Globally, Nortel leads the market in media gateway and softswitch revenue, followed by Siemens and Sonus, the report says. Second quarter softswitch revenue hit $247.9 million, up 106% year-over-year.